Essay Dividend Policy at Linear Technology

605 WordsApr 9, 20133 Pages

Dividend Policy at Linear Technology
Of the 16 companies on the SOX index, six paid dividends and Linear Technology is one of them started at the second quarter in 1993 which is 5.3 million in total. However, in the case, according to Coghlan, “The quarterly dividend was initially set at $0.05 per share. This amounted to $8.3 million, or 15% of FY 1994 earnings.” And their most recent dividend in 2002(cause in the exhibit2, there’s only threes quarter’s data in 2003, so that’s why I choose 2002 as the last year), the dividend was $0.17 per share amounted to 54 million total. Through out the decade, the company’s dividend generally increased and so did share repurchase except 1997 and 2000 which is 11.6 and 0. Their cash flow almost…show more content…

But the dividend will increase 47 million in order to compensate the stockholder for the loss of the share price. Earning per share will changed by 47m/312.4m=0.15 per share. However, if the company decided to repurchase the share, (share price is 30.87), the market value of Linear will drop by 1565.2 million and the share outstanding will be 312.4m-(1565.2m/30.87)=312.4-5.36=307.04 million. The stock price will decreased by 47m/307.04m=0.153.
Return cash by paying dividend can also imply the invstors that the company growing rapidly and can generate profit. And some of the investment company only invests the companies with dividend payment, which means the investment company also consider the firm with dividend payment as reliability. But sometimes, the manager also worried about paying dividend would cause the price dropped because investor would see dividend payment as a signal of declining the price.
It is highly recommended that the company should payout the excess cash as dividend partially and maintain sufficient cash to the capital expenditure just in case the company got negative cash flow in the next several periods. Again, even though paying out as dividend can largely benefit the company，the company should also need reserve some

Xiaoling Tang
FIN 46059 Summer2015
William Billik
08/04/2015
Dividend Policy at Linear Technology
Linear Technology dividend policy is considered a dividend stability policy because of the approach in its allocation. Different from the residual and hybrid approaches, it involves paying dividends in quarters. The quarterly dividends are paid considering fractions of the yearly earnings. This approach is also good because it reduces the uncertainty that investors may have as it provides income for

a decision for Linear Technology on dividend policy. The report analyzed the impact of changing future dividend policy on the value of the company, based on its historical performance, financial history and market trends.
Linear Technology is a large-scale company which focus on the analog segments within semiconductor industry. It went public in 1986 and announced its dividend policy on 1992. Nowadays, under the market environment where dividends are unwilling to be paid, Linear still insisted

Describe the payout policy of Linear Technologies historically. Describe Linear’s current cash position and its financing needs.
The company initiated its dividend in 1993 with a relatively conservative payout ratio of 15%, based on a quarterly dividend of $0.05/share/quarter ($0.00625 split adjusted as per Exhibit 3). As of 3Q2003, the dividend is also $0.05/share/quarter, adjusted for stock splits, which translates into a payout ratio of . The payout ratio is currently 27.5% on an as adjusted

Case 1 Linear Technologies
Group 15
2006120001 김현섭
2006120124 이 진
2007120155 김진현
2007120262 김효선
Three main issues arise when it comes to dividend policy in firms. The first issue is whether
dividend is needed or not and the second issue is regarding which one would be the best option
among various payout methods. Lastly, the third issue is about dividend rate. Whether these
issues will affect corporate values has been debated over the years. This paper will talk about
such issues through

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Linear Technology
Linear Technology is a technology company that focuses on the different elements of semiconductors. The company mostly focuses on analog products within the semiconductor portion of the electronic industry. Linear Technology was unique in their payout policy in the sense that they started with announcing dividends and then continued onto repurchasing. Linear started dividends to gain the respect of investors as well as show that buying shares in the company of Linear was less

Dividend Policy at Linear Technology
FIN610 - 01/31/2012
Lindsay Ramirez / Mavis Yu / Marci McCall / Mohammad Alkhamis / Sarah Spring
1. What do you advise Paul Coghlan to recommend to Linear Technology’s Board of Directors?
We recommend that Coghlan increase the total payout offered to shareholders, keeping the dividend price the same as Q1 of 2003 and simultaneously repurchasing the company stock.
By repurchasing stock rather than offering shareholders a higher dividend

Financial Management Assignment
Linear Technologies Case Solution
1) Describe Linear Technologies pay-out policy.
As we can see from Exhibit 1 Linear Technology has been paying dividend steadily since 1992. Thus the pay-out policy is a large part in dividends. Its first dividend is paid in 1992.
The dividend policy has grown over the years. This may be so that the company projects itself as a less risky share and thus also gaining investors faith. The investors buy its shares and thus increase

9-204-066
REV: FEBRUARY 11, 2004
MALCOLM P. BAKER
ALISON BERKLEY WAGONFELD
Dividend Policy at Linear Technology
It was April 2003 and Paul Coghlan was pulling together his notes for Linear Technology’s board
meeting the following day. As chief financial officer of the Silicon Valley semiconductor company,
Coghlan was responsible for making a recommendation about whether or not Linear should increase
its dividend this quarter. Coghlan and Linear’s CEO Robert Swanson were pleased with the
company’s

alternatives would you pursue?
B. Dividend Policy at Linear Technology.
1. Describe Linear Technology payout policy.
2. What are Linear’s financing needs? Should Linear return cash to its shareholders? What are the tax consequences of keeping cash inside the firm?
3. If Linear were to pay out its entire cash balance as a special dividend, what would be the effect on value? On the share price? On earnings? On earnings per share? What if Linear repurchased shares instead? Assume